Public universities struggle under Sh72 billion debt as funding crisis deepens
Many universities also own commercial properties such as hotels and malls, which remain largely untapped as sources of revenue.
Public universities are struggling under a growing financial burden, with debts now standing at Sh72.3 billion, covering unremitted deductions, salary arrears and pending bills.
University administrators are calling for government intervention to ease the crisis.
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In 2022, the debt stood at Sh60 billion before rising to Sh75 billion, later dropping to the current figure.
These revelations emerged during the Second Biennial Universities Funding Conference in Naivasha, Nakuru County, which brought together stakeholders from universities, policymakers, and the private sector.
According to details presented at the conference, Sh25.9 billion was deducted as pension contributions but never remitted, while Sh20 billion in Pay-As-You-Earn (PAYE) taxes failed to reach the Kenya Revenue Authority (KRA).
Universities also owe Sh3.3 billion to suppliers and have stalled capital projects worth Sh5.1 billion.
Another Sh3.3 billion deducted from employees for savings and loan repayments was not forwarded to their respective saccos. The Universities Fund (UF) has also listed Sh5.6 billion as "other" debts.
The financial crisis persists despite a 2023 funding model that was expected to resolve the situation.
The High Court, however, declared it unconstitutional and the government has since appealed the ruling.
UF Chief Executive Officer Geoffrey Monari emphasised the need for universities to diversify revenue streams.
"We are looking at diversification of revenue streams in universities. Our higher learning institutions should also enter into private-public partnerships (PPPs) to improve their infrastructure, including things like the construction of hostels for students," he said.
Monari also urged universities to utilise their academic staff in consultancy services to generate revenue.
"We hope universities will provide consultancy at maybe 30 per cent of government services," he added.
Make use of assets
National Assembly Committee on Education member Christine Ombaka stressed the need for universities to maximise the use of their assets.
"The universities are choking in debt. They must make use of their land and other properties to generate income, clear debts and ensure they attain international standards," she said.
Despite holding properties worth billions, universities continue to struggle financially.
The University of Nairobi, for instance, owns assets valued at more than Sh200 billion, while Moi University has leased 1,500 acres of its 3,000-acre land in Eldoret to a private investor.
However, this deal is under investigation by the Ethics and Anti-Corruption Commission due to non-compliance by the investor.
Similarly, Egerton University has large tracts of idle land, despite operating an expansive farming programme.
Many universities also own commercial properties such as hotels and malls, which remain largely untapped as sources of revenue.
"The unremitted pension arrears mean that we will not have anything to give our lecturers and researchers once they retire. They won't have anything upon retirement. The pension crisis poses a huge challenge in the social security of the university lecturers and other employees," Monari said.
Members of the National Assembly and Senate Education committees urged universities to find alternative funding options beyond government allocations and tuition fees.
"To achieve long-term financial sustainability, universities must explore alternative sources of funding. Let them make use of their vast lands and properties and commercialize research," Kitutu Masaba MP Clive Gisairo said.
Other solutions proposed at the conference included adopting renewable energy to cut electricity costs, leveraging alumni contributions, and establishing endowment funds.
Higher Education Principal Secretary Beatrice Inyangala revealed that the government is working on incentives to encourage private-sector contributions to research.
"The Ministry of Education plans to increase grant levels to universities in an effort to sustain training programs and raise funding for research," she said.
A communiqué from university vice-chancellors emphasised the need for local research to gain recognition in international peer-reviewed journals.
They also called for tax waivers on research grants and donations while urging improved university linkages to enhance research and academic output.
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